France to link food prices to farmers’ cost of production!!!

[Kiwi Pete]

What a great way to look at things. Not come across that before. Any wealth creation links?

I will scratch up a list and PM you.
Folks don't want to be rich, it's "risky"

 

[unlacedgecko]

I will scratch up a list and PM you.
Folks don't want to be rich, it's "risky"

I'm risk aware not risk adverse. Maybe I'm just a desperate fool?

 

[Agrispeed]

And when the spray supplier and fert rep hears of that he will want a bigger cut as well. So will the machinery suppliers, the accountant and the rest of them. Land will also go to £25,000 an acre and FBTs to £500 per acre overnight because people can "afford" to pay more for it.

So in the end these price controls will achieve absolutely nothing but inflation.

With no incentive for businesses to modernise or improve.

A dairy example;

If I have a COP of say 30ppl I get 35ppl - happy days. If I modernise and change to become more efficient I reduce my COP to 20ppl, however now I get 25ppl. Why bother? Furthermore, my neighbour who has a greater income than myself (because they are a crap farmer and it costs them 45ppl to produce milk, but they get 50ppl) sweats their assets and because of their excellent income the bank offers them a large loan and they buy me out. Now we have an industry with double the COP and the produce is double the cost, which is then passed onto the customer. The customer therefore takes their business elsewhere and suddenly we have a backwards, outdated industry that cannot sell its produce competitively. Oops, thats UK Ag finished. This is without looking at the effects on the supply industry as above.

 

[Kiwi Pete]

I'm risk aware not risk adverse. Maybe I'm just a desperate fool?

Well you're asking, not stating "that doesn't work"... pm sent.

 

[Kiwi Pete]

Haven't you been paying attention? Farming is "special".

Not over here, it isn't supported by our new government at all.
I am solely responsible for where I end up in life
Read that 'cashflow quadrant' book I linked you, it will help explain why farming isn't special at all. Folk accumulating liabilities and expecting cashflow? Come on.
No body has that much of a success entitlement if they are both stupid and have their mind closed.

 

[Kiwi Pete]

its kept most of us in business

This.
Is that your own personal goal, to be "kept in business" along with 100,000 others?
To me, the solution is the problem, market forces will eventually squeeze some folk out- survivor island stuff.
Sorry if it always seems I'm attacking you @Bossfarmer but our views on protection will never see eye to eye - I can't really see your way panning out, any better than you see my way!
But it's nothing personal just completely different paradigms we farm from.

You brought up risk before and you have a point, making drastic changes on a whim can be very costly indeed - try walking into the stock market without any knowledge, that's also very risky.
But, with research, the risks fall away.

 

[czechmate]

So 380 Kg taking them up to 780 Kg = 400 Kg to put on a broutard ,after a beast gets to that start weight it has an FCE of 6 / 1. When it gets past 600 Kg this drops to an FCE of 8 / 1, so how do you do it on 2 tonne?
2017 Teagasc Beef Budgets have a start weight of 420 Kg [6 month finishing ] needing a sale price of e 4,21 Kg C .
[ 8 month finishing] requires a price of e 4,37 Kg C.
This is the Break even price, assuming NO Margin and No mortality.
When you do your costings what transfer price do you allow for your broutards?

Don't know. Good cows?
For about 220 days, they eat about 9 kg and put on about 1.8 kg. tbh we havn't weighed anything for ages as it was always the same and just a waste of time.

Just curious, how much is the two vaccines to sell broutards rog?

 

[glasshouse]

To some extent your right about farmers sense prevailing,
Farmers have no income guarantee, farm wokers do, a few years ago despite getting sub the farm lost more than I draw as a wage in one year,
So if we didn't have capital reserves to cope with bad years I would have infact earned nothing at all for an entire years work, the following year we made double my earnings in profit, the problem is farming is volitile what pays well one year may not the next and we don't work in an industry with fast turn arounds most are a year minimum, so before you know it the good profit you made last year with potatoes is this year is only a breakeven or loss, it's not that we have done anything different it's just the market has moved into over supply, and the year they were good money when you were planting them and making planting choices it looked no different from the last. It's the same for animals, you only get what you get on the day you take them to market, not the day your lamb is born or the day the tup serviced the ewe,
Farming has plenty of volatility in it from markets to the strength of the pound to world over supply, to the weather, we already gamble very big every year, the only sure thing has been the sub. If that gets taken away from small farmers I can see a lot dropping out just because they could work all year and make nothing for a whole years work, where the year before it would have been a profit for the same work. No other essential industries like water and power, don't know from one year to the next if they will make the money they need to live.

And someone has to be the farmer unless you prefer state owned farming.

That is the fundamental difference between uk and nz.
Nz will never starve, uk has often starved and will again.
Thats why food is a special case.
Thats why politicians walk away from us at their peril.

 

[digger64]

So 380 Kg taking them up to 780 Kg = 400 Kg to put on a broutard ,after a beast gets to that start weight it has an FCE of 6 / 1. When it gets past 600 Kg this drops to an FCE of 8 / 1, so how do you do it on 2 tonne?
2017 Teagasc Beef Budgets have a start weight of 420 Kg [6 month finishing ] needing a sale price of e 4,21 Kg C .
[ 8 month finishing] requires a price of e 4,37 Kg C.
This is the Break even price, assuming NO Margin and No mortality.
When you do your costings what transfer price do you allow for your broutards?

Maize perhaps ?

 

[Dave645]

That neatly sums up the typical farmer attitude 'make it work, at all costs
I have read a lot of material on the subject of wealth creation, and the golden rule amongst business folk around the world is "pay yourself, first"
Which means of course, morale is high, you reward yourself properly as you would any other contractor/worker/professional in the business, for time.
However, many farmers seem to be content with working an 16+ hour day, and moaning about their lot "fudging weather" "next year, Rodney" "haven't got time for a holiday/grow a garden/mow the lawn/kill a mutton" and thus drastically diminish themselves.
So I pay myself, a good rate for my time, which encourages me to look for other avenues to put the funds back into the company.
After all, I am the staff, the agronomist, the livestock drafter, serviceman, gardener, cook, butler at times... and host of other things.
So I use my talents for others, and the income tops up the account nicely.
I am a tough boss but a fair one, and it helps a lot with morale when I invoice my own company and pay myself.

It drives much of the innovation, this extra bill to pay. A good thing to invest in, yourself.

That's why my side line pays me big money, I decided if I was doing anything else with my time it had to garentee my self a good wage for my time, I keep it as a causal side line that pays well when I get an order, like most suggest, I produce ready to market items but wholesale the people I deal with add their cut but I set my margins up front and never below £60/hr when I do sell direct I double my money again. I have friends that do similar to me but use eBay as there outlet, it sounds good in practice but their margins are pegged by China, and postage and fees cut into that, and I doubt it comes to £15/hr from which they have to cover their overheads, some of my stuff turns £5 of materials into £90 of product or £180/270 retail. Which suits me, it's not stuff you will ever sell in a normal shop, Or sell on eBay or locally. It's all custom items to my clients wishes. (No I am not telling you what it is)

On a side note some others have said "farmings special" in not a nice way, it is and it isn't could the world live without a farming industry, the answer is no, but the reality is we could manage with less farmers, it's not a nice picture for us smaller farmers to see.
But you should be glad we are not all business men that run at the first loss we often put up with very poor returns far less than anyone in their right mind would put up with. If not for us who would feed you all.
The farming world has more mugs than its rightful share, if they all start putting business hats on who will be left farming the land. My side line earns me 6 times my farm hourly rate, but we family farmers are stupidly loyal to our farms. I think it would be universally true for the majority of farmers they could earn more from less work outside farming, but they wouldn't be there own boss.

And if you think the picture is better for big farmers your wrong, it's just as bad if not worse it's just the good years for them are very good and with the larger diversity that a big farm can provide the downs can be less bad, does that mean they can manage without sub it should but, are they all in the position to manage without it, or have they relied on it so it's integral to their business I would say yes more so, as it's a far bigger amount. More so called big farms have gone bust over the years than small farms, most small farms retire and sell up the big ones seem to go bust.

As for special case no not really the govermant did it to the coal miners they stop subsidising them and it dropped the bottom out of the industry, was it the right call I am not sure, Would it have been cheaper supporting the mines to stay open at least the ones close to profitable, or pay income support to all the unemployed miners they ended up doing and all the people in the support industries.
Miners like farmers made money from nothing they dug out coal we grow crops, there are not many primary industries that provide nessery items, we have the power and fuel industry the water industry and food industry they are the bottom line, so the question is where do you want your food grown, if your happy for it to go mostly overseas, and your happy that food security will be in the hands of foreign trade deals and tariffs, and availability is 100% garenteed then throw the dice drop subs. If not you have to find away to keep farmers chugging along in a growingly expensive and risky industry, you have also to encourage a new generation into it. And all that also risks increased shop prices for your food, for no other reason but the food miles it will travel. If all lamb production stopped in the uk it would increase demand on imports any shortage in availability in the local foreign market you paying through the nose for it, and once that uk production goes it's unlikly to come back, just like the coal mines shutting once they did they never reopened, so be sure your never going to need us before you pull the plug, or be very sure of the outcome when you pull the plug.
I have gone on to long as normal ...lol.

 

[glasshouse]

That's why my side line pays me big money, I decided if I was doing anything else with my time it had to garentee my self a good wage for my time, I keep it as a causal side line that pays well when I get an order, like most suggest, I produce ready to market items but wholesale the people I deal with add their cut but I set my margins up front and never below £60/hr when I do sell direct I double my money again. I have friends that do similar to me but use eBay as there outlet, it sounds good in practice but their margins are pegged by China, and postage and fees cut into that, and I doubt it comes to £15/hr from which they have to cover their overheads, some of my stuff turns £5 of materials into £90 of product or £180/270 retail. Which suits me, it's not stuff you will ever sell in a normal shop, Or sell on eBay or locally. It's all custom items to my clients wishes. (No I am not telling you what it is)

On a side note some others have said "farmings special" in not a nice way, it is and it isn't could the world live without a farming industry, the answer is no, but the reality is we could manage with less farmers, it's not a nice picture for us smaller farmers to see.
But you should be glad we are not all business men that run at the first loss we often put up with very poor returns far less than anyone in their right mind would put up with. If not for us who would feed you all.
The farming world has more mugs than its rightful share, if they all start putting business hats on who will be left farming the land. My side line earns me 6 times my farm hourly rate, but we family farmers are stupidly loyal to our farms. I think it would be universally true for the majority of farmers they could earn more from less work outside farming, but they wouldn't be there own boss.

And if you think the picture is better for big farmers your wrong, it's just as bad if not worse it's just the good years for them are very good and with the larger diversity that a big farm can provide the downs can be less bad, does that mean they can manage without sub it should but, are they all in the position to manage without it, or have they relied on it so it's integral to their business I would say yes more so, as it's a far bigger amount. More so called big farms have gone bust over the years than small farms, most small farms retire and sell up the big ones seem to go bust.

As for special case no not really the govermant did it to the coal miners they stop subsidising them and it dropped the bottom out of the industry, was it the right call I am not sure, Would it have been cheaper supporting the mines to stay open at least the ones close to profitable, or pay income support to all the unemployed miners they ended up doing and all the people in the support industries.
Miners like farmers made money from nothing they dug out coal we grow crops, there are not many primary industries that provide nessery items, we have the power and fuel industry the water industry and food industry they are the bottom line, so the question is where do you want your food grown, if your happy for it to go mostly overseas, and your happy that food security will be in the hands of foreign trade deals and tariffs, and availability is 100% garenteed then throw the dice drop subs. If not you have to find away to keep farmers chugging along in a growingly expensive and risky industry, you have also to encourage a new generation into it. And all that also risks increased shop prices for your food, for no other reason but the food miles it will travel. If all lamb production stopped in the uk it would increase demand on imports any shortage in availability in the local foreign market you paying through the nose for it, and once that uk production goes it's unlikly to come back, just like the coal mines shutting once they did they never reopened, so be sure your never going to need us before you pull the plug, or be very sure of the outcome when you pull the plug.
I have gone on to long as normal ...lol.

Well said

 

[glasshouse]

During the war, the army generals were more worried about running out of tea than running out of ammunition.
No tea would lead to revolt.

 

[brigadoon]

To some extent your right about farmers sense prevailing,
Farmers have no income guarantee, farm wokers do, a few years ago despite getting sub the farm lost more than I draw as a wage in one year,
So if we didn't have capital reserves to cope with bad years I would have infact earned nothing at all for an entire years work, the following year we made double my earnings in profit, the problem is farming is volitile what pays well one year may not the next and we don't work in an industry with fast turn arounds most are a year minimum, so before you know it the good profit you made last year with potatoes is this year is only a breakeven or loss, it's not that we have done anything different it's just the market has moved into over supply, and the year they were good money when you were planting them and making planting choices it looked no different from the last. It's the same for animals, you only get what you get on the day you take them to market, not the day your lamb is born or the day the tup serviced the ewe,
Farming has plenty of volatility in it from markets to the strength of the pound to world over supply, to the weather, we already gamble very big every year, the only sure thing has been the sub. If that gets taken away from small farmers I can see a lot dropping out just because they could work all year and make nothing for a whole years work, where the year before it would have been a profit for the same work. No other essential industries like water and power, don't know from one year to the next if they will make the money they need to live.

And someone has to be the farmer unless you prefer state owned farming.

All true enough Davie and that is why I referred to the longer term.

You raise an interesting point though - will anyone advocating a "cost plus" system be happy to stick to it in a good year?

 

[Dave645]

All true enough Davie and that is why I referred to the longer term.

You raise an interesting point though - will anyone advocating a "cost plus" system be happy to stick to it in a good year?

As for cost plus, there will be no sticking to it it's a minimum not a max, if they want to set a max price so we are all on contract as it were, it would never produce good years the years all businesses need to invest and cope with mistakes or break downs.
As others have pointed out cost plus has been tried and it failed, it's because it's very difficult to get right, if you blanket set it, some will thrive at tax payers expense while some still barely stay in business.
If you do it at a per farmer level so they asses your farm and set a price for your farm giving you a basic minimum living that varies from farm to farm who buys it if your produce is 25% more expensive than the next farmers. It's just a mess.
Any new system needs to force farmers to be efficient, it also has to offer tax payers a good return on there money, it also has to reflect what the farmer has invested and is investing. It has to allow dead wood to be trimmed but allow new blood to enter the industry, it has to help cover some of the volatility farming has to weather from all sides.
I am open to suggestions I have made some in the past but non have really covered all bases, not in a way that doesn't corrupt the open market in some way. The bottom line is we need farmers in the world and we don't want shortages of food, so we will never see true market openness if it risks putting the farming industry in the floor.

As daft as it seems agencies like the old milk marketing board and potatoe marketing boards, agencies that help farmers market and control over supply may be closer to the right way forward that this threads suggestion. It would be a bit like what they used setaside for in the EU to bring production down to stop the pressure of over supply, it forced food prices up but it stabilised farm gate prices we don't operate with massive food mountains any more. Which is only a good thing.

The uk has an opportunity to shape the uk farming industry to meet uk demands cut imports and reduces exports of unwanted food. By reducing production of these foods. But that type of leadership has to come from the top with the clout to enforce it. It needs oversite looking carefully at what's imported and exported read the consumer demands like the supermarkets do. the problem is we aren't nessaseraly the cheapest place to produce all this food sure we can do better that 60% which is the current % we produce of the food consumed in the uk but will we be cheaper, or will we just push world prices up by trimming the fat, once a commodity isn't in oversupply it's price tends to rise.
Will farming in the uk be profitable even under production control to reduce over supply, will farmers still need other support only time would tell.
If any system that pays sub is still in place after any other reforms, they should look at it differently we have an area payment now, prity much flat rate, if this moved to a minimum income guarantee based on area farmed instead....
So Mr ex has 300 acres his minimum income garentee is 30k. One year he makes 20k so gets 10k sub the next he makes 30k so gets non. The sub compensates for bad years but gives nothing in good.
Mr ex with 3000 acres has the same income guarantee level but it would look strange that he would need more sub than the small farmer.
Mr ex with 100 acres his minimum income is say 15k because (that's just from the farm) his small farm is not expected to bring him a 30k living from it every year. Similar things could be done with herd numbers and farm sizes so it fits in all areas of the industry.
This is very similar to joe publics income support..........we don't make you wealthy just keep you fed. The numbers are just examples of what it may be like the actual numbers may be better or worse.
This also helps if we end up with cost of production above the world market price so have to sell at a loss.

As daft as it is quota systems done right will help a lot.

 

[Bossfarmer]

Most of what been mentioned on this thread isn't diversification its marketing, something producers in any other industry have to do to survive. You don't have to because the government give you money just because you won the lucky gene pool and were born a farmers son in Scotland. If you make money your only focus is buying more land to expand your empire, you don't have to spend on marketing because people just take your product and pay you for it. Do you even know where it ends up?
My point is if you produce the same as everyone else you get world prices. If you want more for it you have to add value or cut out the middle man and do it yourself and yes this may use some of the money you were going to use to buy more land.

if you produce the same as everyone else you get world prices

we dont, we produce food to a higher standard and live in a country where the consumers are very wealthy and can afford to pay more for this quality product, the climate means its more expensive to produce food so it should be reflected in what the farmers gets paid, we as farmers cant afford to embark on big marketing campaigns which of course would never compete with the power of the supermarkets so why suggest it?

 

[le bon paysan]

Maize perhaps ?

Cereal straw diet

 

[Bossfarmer]

Not over here, it isn't supported by our new government at all.
I am solely responsible for where I end up in life
Read that 'cashflow quadrant' book I linked you, it will help explain why farming isn't special at all. Folk accumulating liabilities and expecting cashflow? Come on.
No body has that much of a success entitlement if they are both stupid and have their mind closed.

thats mabye because you have less than 1/10th of the people to feed on the same landmass?

 

[le bon paysan]

Don't know. Good cows?
For about 220 days, they eat about 9 kg and put on about 1.8 kg. tbh we havn't weighed anything for ages as it was always the same and just a waste of time.

Just curious, how much is the two vaccines to sell broutards rog?

No idea what "good cows" is supposed to mean. I asked what you allowed for your transfer cost?

Cost of FCO 8 Vaccine is € 1, 83 each , they need 2 jabs 3 weeks apart. Needs your Vet to do the jab. Sanitaire standard charge.

 

[Bossfarmer]

als

Not over here, it isn't supported by our new government at all.
I am solely responsible for where I end up in life
Read that 'cashflow quadrant' book I linked you, it will help explain why farming isn't special at all. Folk accumulating liabilities and expecting cashflow? Come on.
No body has that much of a success entitlement if they are both stupid and have their mind closed.

also has it occured to you that you have the same latitude as Italy and can grow a bigger variety of things and have much more grass growth, less housing costs for livestock??

 

[Bossfarmer]

This.
Is that your own personal goal, to be "kept in business" along with 100,000 others?
To me, the solution is the problem, market forces will eventually squeeze some folk out- survivor island stuff.
Sorry if it always seems I'm attacking you @Bossfarmer but our views on protection will never see eye to eye - I can't really see your way panning out, any better than you see my way!
But it's nothing personal just completely different paradigms we farm from.

You brought up risk before and you have a point, making drastic changes on a whim can be very costly indeed - try walking into the stock market without any knowledge, that's also very risky.
But, with research, the risks fall away.

market forces are already squeezing many farms out of business even with subs, world prices are too low to sustainably farm in large areas of the UK no matter how good a farmer you are FACT